Problems of Recognition and Enforcement of Foreign Arbitral Awards in Kazakhstan
In this article, we will provide our statistics on recognition and enforcement (“R&E”) of foreign arbitral awards in the Republic of Kazakhstan (“ROK”), exploring the identified problems and offering recommendations.
I. R&E in Numbers
To understand the status quo of R&E of foreign arbitral awards in ROK, one must first look at the numbers. In the “Generalization of the Judicial Practice on Recognition, Enforcement, and Cancellation of Arbitral Awards for 2019-2022” (the “SC Practice Generalization”), the ROK Supreme Court attempted to summarise the relevant practices with respect to domestic arbitral awards, but omitted statistical data on R&E of foreign arbitral awards.
Consequently, we have attempted to conduct an independent analysis of foreign arbitral awards’ R&E cases decided in the 2011-2025 timeframe. To identify relevant cases, we collected court judgments from the “Paragraph”[1] and “BestProfi”[2] databases that mentioned the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (New York) (“NY Convention”) or ROK law provisions on R&E of foreign arbitral awards.
Of the 24 cases located, in only 12 did the courts enforce foreign arbitral awards,[3] producing a meagre 50% enforcement rate.
Of the 12 cases where the awards were not enforced, 3 applications were refused enforcement on the basis of international treaties, 3 were returned to the applicant due to the lack of court’s jurisdiction or lack of party representative’s authority,[4] and 6 were remanded for retrial[5].
Of the 3 refusals to recognize and enforce:
- 1 was under the ROK Civil Procedure Code[6] (“CPC”) ground of respondent not having been duly notified of arbitration proceedings;[7]
- 1 was based on the Minsk Convention on Legal Aid and Legal Relations in Civil, Family and Criminal Cases[8] (“Minsk Convention”);[9]
- 1 was based on the Treaty between ROK and the Peoples’ Republic of China (“PRC”) on legal assistance in civil and criminal matters dated 14 January 1993.[10]
Applicants from 12 jurisdictions applied for R&E of foreign arbitral awards:
- Successful applicants came from ROK (2 cases), Ukraine (3 cases), Belgium, the Netherlands, Switzerland, Cyprus, Bermuda, Hong Kong (2 cases);
- Applicants whose applications were refused were from Russia, the Netherlands, and PRC;
- Applicants whose cases were remanded for retrial were from the British Virgin Islands, Bulgaria, Ukraine, Russia, and PRC; and
- Applicants whose applications were returned were from Turkey, Georgia, and Hong Kong.
The above numbers identify a low rate of R&E of foreign arbitral awards in ROK. This is in stark contrast with more arbitration-friendly jurisdictions such as PRC, where in the 2012-2022 period, approximately 91% of the 193 foreign awards submitted to PRC courts were fully recognized and enforced.[11]
II. Causes behind low R&E rates
Below are some of the identified causes of the problem.
(1) The courts’ misunderstanding of the concept of arbitration
In international practice it is accepted that arbitration entails a non-governmental or private decision-maker and not a court or government agency.[12] However, ROK court decisions continuously misapply provisions of treaties on R&E of court judgments (e.g., Minsk Convention, Kiev Convention[13]) to arbitral awards, seemingly lacking an understanding that court judgments and arbitral awards are not the same.
Conversely, ROK courts often misapply the NY Convention to the R&E of foreign court judgments. A simple search for judgments applying the NY Convention provisions shows an abundance of decisions on enforcement of Russian “Arbitrazh Courts” judgments. For example, in Dieseltrade Export OJSC v Batys Ural AZ.KZ LLP,[14] the first instance court ruled for R&E of the decision of the Arbitrazh Court of Yaroslavl Region on approval of the parties’ settlement agreeement. The debtor appealed on the basis that the sum of the debt was subject to correction by set-off. The appellate court upheld the lower court’s decision to enforce, reasoning that the debtor’s argument on set-off was not a ground for refusing to enforce under the NY Convention and ROK CPC. The court’s application of the NY Convention to the Arbitrazh Court’s decision was incorrect, as Russian “Arbitrazh Courts” are national courts within the state judicial system and have little to do with arbitration, other than being authorized to set aside or recognize and enforce arbitral awards.
Some courts also lack the understanding of finality of arbitral awards – that their character is binding and not bearing the quality of advisory recommendation, and that they are subject only to limited grounds of challenge in national courts. This is seen in decisions such as Pharmstandard OJSC v Interpharma-K JSC,[15]where a first instance court refused enforcement of an arbitral award because the latter did not state that it had entered into legal force and was subject to enforcement.
(2) Unsubstantiated document requests
In R&E proceedings, ROK courts frequently request documents outside the scope of the NY Convention, as illustrated in the below cases involving PRC applicants.
Case 1:
In Hengtian Venture Capital Co Ltd v Nazar Global Trade LLP,[16] an appellate court reversed a lower court’s decision to enforce a CIETAC award on collection of USD 510,502 debt from a Kazakhstani respondent in favour of a Chinese claimant, remanding the case for a retrial.
As one of the reasons for the reversal, the appellate court posited that as part of the application for R&E, the claimant had submitted notarized photographs of copies of the award and the arbitration agreement. The appellate court called into question the copies’ authenticity without basing such doubts on factual or legal grounds. ROK law does not prohibit notarization of photographed copies, so long as the notary checks the photographed copy against the original document. The court itself conceded that the applicant had the original documents, so there appeared to be no reason to believe that the notary did not verify the photographs against the originals.
Case 2:
In Hong Kong Dragon Electronics Ltd v Korkem Telekom LLP,[17] an appellate court overturned a lower court's decision that had recognized and enforced a CIETAC award for Hong Kong Dragon Electronics Ltd. The appellate court noted that under the NY Convention, translations of arbitration awards must be certified by an official or sworn translator, or a diplomatic or consular agent, and found that (1) while the award’s translation from Chinese to Russian included a 'notarial act' certifying the translator’s signature, it lacked confirmation of the translator's official status, and that (2) the translation should have been certified by the ROK consulate in PRC.
The appellate court failed to clarify the legal basis for finding the translator’s lack of official status. Under the ROK Law “On Notaries”,[18] a notary certifies the accuracy of a translation from one language to another if the notary is proficient in the respective languages, and if the notary is not proficient in the respective languages, the translation may be performed by a translator whose signature is certified by the notary. Neither ROK nor PRC legislation requires a notary to attach confirmation that the translation was performed by an official or sworn translator. The notarial act complied with both ROK and PRC legislations. Moreover, after the translation’s notarization, the arbitration award was legalized by the PRC Ministry of Foreign Affairs and the ROK Consulate in PRC.
To protect the client’s interests and expedite the process, this article’s co-author, Ms Nurkeyeva, obtained confirmation from the ROK Embassy in PRC that the translation was conducted per established procedures, obtained the translation’s certification by the ROK Consulate in PRC, and refiled the application with the first instance court. Eventually, the CIETAC award was recognized and enforced after delays caused by the Kazakh courts' misapplication of the NY Convention and ROK legislation.
Other examples of ROK courts’ artificial reasons to refuse enforcement include absurd arguments such as the number of pages of an arbitral award not matching the number of pages of an arbitration agreement (Foton International Trad Co. Ltd v. Alibai K[19]), or the absence of a stamp confirming finality of the award (Pharmstandard OJSC v Interpharma-K JSC[20]).
(3) Incorrect application of grounds for refusal to enforce and recognize arbitral awards
The court decision below is worth discussing due to its incorrect application of the law to invalidate an arbitration agreement.
In A.I.K.-AGRICULTURAL INTERNATIONAL KOMPANY LTD v DARNIS SPH LLP,[21] the parties’ equipment sale and purchase contract contained an arbitration clause referring disputes to resolution by the SCC Arbitration Institute in Sweden. The purchaser (respondent) had breached its payment obligations, but instead of applying to the arbitration institute, the seller (claimant) applied to a ROK court. In the claimant’s opinion, the arbitration clause was invalid – the clause’s reference to SCC arbitration was futile, as the claimant’s incorporation state (Saint Kitts and Nevis) was not party to the NY Convention, – and that could eventually serve as a basis for refusing R&E of any award rendered by SCC tribunal. The court satisfied the claim and recognized the arbitration clause as invalid.
The fundamental problem of this ruling is that the court lacked a basic understanding of when the NY Convention applies.
Under art. I.1 of the NY Convention, it applies “to the recognition and enforcement of arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought, and arising out of differences between persons, whether physical or legal. It shall also apply to arbitral awards not considered as domestic awards in the State where their recognition and enforcement are sought”.
Thus, under art. I.1 of the NY Convention, if the award were made in Sweden (indicated as the seat of arbitration), and the claimant were to apply for enforcement in ROK, there would be no problem with the NY Convention’s applicability, as both Sweden and ROK are parties to the NY Convention. Even if the award were made in Saint Kitts and Nevis, it could potentially be enforced in ROK, as ROK has not made a reciprocity reservation limiting the NY Convention’s application only to awards rendered in the territory of a state party to the NY Convention.
Even if the reason behind the claimant’s circumvention of the arbitration agreement were that the award would not be recognized and enforced in Saint Kitts and Nevis, R&E of the award in ROK would still be possible under art. 503.1 ROK CPC, as the respondent was a company established in ROK, presumably with assets in ROK.
The court failed to refute the claimant’s false argument that Saint Kitts and Nevis’s not being party to the NY Convention would warrant refusal to recognize and enforce an SCC award. In fact, Art. V of the NY Convention does not contain such ground for refusal. The NY Convention does not tie its applicability to the parties’ nationanility – rather, the deciding factor is the nationality of the award and the forum where the application for R&E is made.
Finally, the court did not even cite any specific provisions of the NY Convention or ROK law under which the arbitration clause could be held to be invalid. Under art. 226.5 of the ROK CPC, in its decision, a court must indicate the evidence, arguments and laws on which it is based. However, the court’s decision here sorely lacked such components.
All of the above speaks to some ROK judges’ lack of competence in dealing not only with international law, but domestic law as well.
III. Recommendations
At the core of the problem of low R&E rates lies the judiciary. In the ROK, the judiciary’s understanding of arbitration and the NY Convention is often inconsistent, as evident in application of inappropriate legal standards, treatment of arbitral awards as foreign court judgments, and imposition of additional procedural requirements that are not mandated by the NY Convention.
There has been a plethora of measures and initiatives to improve the judiciary’s work, which will not be discussed here.
Instead, we would like to recommend that the ROK Supreme Court doubles down on the task of systematization of court practice to increase its transparency and to more accurately determine the patterns of, inter alia, R&E of foreign arbitral awards. The timing for such work is ripe now in light of the 2025 judicial system reform[22] whereby the ROK Supreme Court’s cassation review duties were assigned to newly created cassation courts, allowing the ROK Supreme Court to focus on ensuring judicial practice uniformity.[23]
Such systematization could be done by emulating the PRC judicial system’s practices. Since the PRC Supreme People’s Court established the China Judgements Online (CJO) website in 2014, more than 141 million court judgments have been posted online, making the database one of the largest in the world.[24] Judicial transparency in PRC has become synonymous with the placement of final court judgments online.[25] This is in stark contrast with the ROK court judgments database – there are more than 110,000 judgments published on the ROK Supreme Court website,[26] but a lot of the published cases reflect only the decisions of certain court instances, with the final judgments often missing. For example, for the 6 court decisions concerning R&E of foreign arbitral awards where the cases were remanded for retrial, we could not locate the retrial decisions. Therefore, in providing the statistics on R&E of foreign arbitral awards above, we do not claim that the numbers are accurate in the absence of a comprehensive and reliable database of court judgments.
The ROK Supreme Court should pay particular attention to reflecting the data on R&E of foreign arbitral awards separately from the data regarding domestic arbitral awards and foreign court judgments. As stated in the SC Practice Generalization, currently the ROK Supreme Court’s judicial databases record the data on R&E of awards under a unified entry: “issuance of writs of execution for arbitral awards”. This does not allow for a separate analysis of different categories of cases or reliability of statistics.
The above recommendations should be heeded by the ROK Supreme Court, as their implementation will give a clearer ground for measures to improve the judiciary, will significantly inform foreign investors in Kazakhstan and thus influence the investment climate.
Authors:
Gulnur Nurkeyeva, Managing Partner, Head of China office
Zhibek Mukhamedkarim (at the time of the publication not an employee of GRATA International)
[1] Judicial database available at: https://online.zakon.kz/lawyer.
[2] Judicial database available at: https://bestprofi.com/.
[3] Resolution No. 4799-18-00-2а/102 of Judicial Collegium on Civil Matters of Mangistau Region Court dated 31 January 2018 (“Caspian Offshore and Marine Construction LLP v ERSAI Caspian Contractor LLP”); Resolutions No. 3599-23-00-2ам/437 and 3599-23-00-2ам/430 of the Judicial Collegium on Civil Matters of the Karaganda Region Court dated 31 July 2023 (“SCALDIS-RUIEN N.V. v ASTAGRА LLP”; “Tracomex B.V. v ASTAGRА LLP”); Resolution No. 3999-19-00-2ам/181 of the Judicial Collegium on Civil Matters of the Kostanai Region Court dated 12 November 2019 (“Eurasia Groupe AG v Kulan LLP”); Resolution of the Judicial Collegium on Civil Matters of the Nur-Sultan City Court No. 7199-21-00-2а/1543 dated 26 March 2021 (“Republican state institution 'Committee of Highways of the Ministry of Industry and Infrastructure Development of the Republic of Kazakhstan'" v Todini Costruzioni Generali S.p.A., Todini Central Asia LLP”); Resolution of the Judicial Collegium on Civil Matters of the ROK Supreme Court No. 6001-21-00-3Г/1732 dated 19 April 2021(“Tau-Ken Temir LLP v Fabrika Rukavnykh Filtrov LLC”); Resolution No. 7599-19-00-2а/798 of the Appellate Judicial Collegium on Civil Matters of the Almaty City Court dated 13 February 2019 (“METINVEST HOLDING LLC v EurasianPipelineConsortium LLP”); Resolution of the Special Inter-District Economic Court of Pavlodar Region on case No. 5599-20-00-2а/899 dated 11 August 2020 (“PJSC "Dneprotyazhmash" v LLP "EVA-GROUP KZ”); Resolution of the Special Inter-District Economic Court of Almaty City dated 1 June 2016 (“Winpeg Finance Limited v Fintransoil LLP”); Resolution No. 7199-23-00-2ам/43 of the Judge of Judicial Collegium on Civil Matters of Astana City Court dated 16 February 2023 (“Hong Kong Dragon Electronics Ltd v Korkem Telekom LLP”); Resolution of the Special Inter-District Economic Court of Almaty City dated 20 December 2011 (“Vitol Central Asia Limited v Kazneftekhim-Kopa LLP”); Resolution of the Special Inter-District Economic Court of Astana city No7119-24-00-2М/1160 dated 6 August 2024 (“Hong Kong Dragon Electronics Ltd v Korkem Telekom LLP”).
[4] Resolution of the Judicial Collegium on Civil Matters of the Nur-Sultan City Court
No. 7199-21-00-2ам/185 dated 23 June 2021 (“Entegre Satek Elektronik Anonim
Sirkete v Arabtec Consolidated Contractors Limited”); Resolution No. 7199-23-00-2ам/43 of the Judge of Judicial Collegium on Civil Matters of Astana City Court dated 16 February 2023 (“Hong Kong Dragon Electronics Ltd v Korkem Telekom LLP”); Resolution No. 7599-25-00-2а/4699 dated 28 May 2025 (“Department of Motor Roads of the Ministry of Regional Development and Infrastructure of Georgia v Todini Costruzioni Generali S.p.A.”).
[5] Resolution of Judicial Collegium on Civil Cases of Shymkent City Court No. 2 а-996/2023 dated 4 July 2023 (“Norfolk Oil Ltd v Akkord Industry ConstructionInvestment Corporation”); Resolution of the Judicial Collegium on Civil Cases of Astana City Court No. 7199-23-00-2ам/6 dated 24 January 2023 (“SAVVY BUSINESS SOLE Ltd., APPLIED ECONOMIC RESEARCH CENTRE LTD v Ministry of Labour and Social Protection of Population”); Decision of Court Collegium on Civil Cases of the ROK SC dated 7 December 2016 (“PJSC Rubezhnoye Cardboard and Packaging Mill v. Jambylgyps JSC”); Resolution of Judicial Collegium on Civil Cases of Almaty City Court dated 19 May 2022 (“HENGTIAN VENTURE CAPITAL CO LTD v NAZAR GLOBAL TRADE LLP”); Resolution of the Judicial Collegium on Civil Cases of Almaty City Court No. 2 а-254/2021 dated 1 March 2021 (“Dmitrievsky Chemical Plant LLC v. Munai Energo Prom LLC”); Resolution of Cassation Instance of the Astana City Court dated 15 March 2012; Resolution No. 3гп-946-12 of Supervisory Judicial Collegium on Civil and Administrative Cases of the ROK SC dated 31 October 2012 (“ChKZ-Eksport LLC v Mezhregionkomplekt-Astana LLP”).
[6] ROK Civil Procedure Code dated 3 November 2015.
[7] Decision No. 1999-22-00-2ам/9 of Almaty Region Court, 15 March 2022 (HUNLAND IMPEX BV v “Aidarbayev Erik Serikovich” farming business).
[8] Convention on Legal Aid and Legal Relations in Civil, Family and Criminal Cases, adopted in Minsk on 22 January 1993.
[9] Resolution of the Appellate Judicial Collegium of Almaty City Court, 8 February 2017 (Pharmstandard OJSC v Interpharma-K JSC).
[10] Resolution No. 7517-19-00-2м/36189, Medeu District Court of Almaty City, 10 July 2019 (Foton International Trad Co. Ltd v. Alibai K).
[11] Sam (Ronghui) Li, Michael (Haomin) Zhang, Lucas (Zhouquan) Lu, Tina (Yanfei) Qian (Zhong Lun Law Firm (Shanghai Office)), Recognition and Enforcement of Foreign Arbitral Awards in China Between 2012-2022: Review and Remarks (Part I), Kluwer Arbitration Blog, Sep. 12, 2023., at 2.
[12] Gary B. Born, International Commercial Arbitration, ch. 2 at 10 (3d ed. 2021). Id., at 11.
[13] Convention on Settling Disputes Related to Commercial Activities, adopted in Kiev on 20 March 1992.
[14] Resolution of the Judicial Collegium on Civil Cases of Aktubink Region Court No. 1599-19-00-2ам/117 dated 30 April 2019.
[15] Resolution of the Appellate Judicial Collegium of Almaty City Court dated 8 February 2017.
[16] Resolution of Judicial Collegium on Civil Cases of Almaty City Court dated 19 May 2022.
[17] Resolution No. 7199-23-00-2ам/43 of the Judge of Judicial Collegium on Civil Matters of Astana City Court dated 16 February 2023.
[18] ROK Law “On Notaries” No. 155-I dated 14 July 1997, Article 80.
[19] Resolution No. 7517-19-00-2м/36189 of the Medeu District Court of Almaty City dated 10 July 2019.
[20] Resolution of the Appellate Judicial Collegium of Almaty City Court dated 8 February 2017.
[21] Resolution of Specialized Inter-District Economic Court of Almaty City on case No. 7527-17-00-2/8482 dated 13 September 2017.
[22] By virtue of ROK Constitutional Law No. 109-VIII dated 5 July 2024 “On Amendments and Additions to Certain Constitutional Laws of the Republic of Kazakhstan” and other legislative acts.
[23] Although the ROK Supreme Court still retains the function of “supercassation”, i.e., review of cases only in exceptional cases where judicial acts may lead to grave consequences or violate the rights of an indefinite number of persons.
[24] Benjamin Liebman, Rachel Stern, Xiaohan Wu & Margaret Roberts, Rolling Back Transparency in China's Courts, 123 COLUM. L. REV. 2407, 2410 (2023).
[25] Id., at 2412.
[26] According to the ROK Association of Judges, see https://krso.kz/ru/kratkij-obzor-razvitiya.